EDIT: I have to go do my class at Stanford (http://startupclass.samaltman.com; Paul Graham is speaking today), but will try to answer more questions later this afternoon!

EDIT 2: Back.

EDIT 3: Ok, I have to go to five hours of non-stop meetings, so I'm going to sign off. Thanks for reading!

I put up a blog post here: http://blog.samaltman.com/reddit

TL;DR: I'm investing (along with many others) in reddit.

We're working on a way to give 10% of our shares from this round to the reddit community. I hope we can increase community ownership over time--I've always thought communities like reddit should mostly own themselves, and that it's time for some innovation around corporate structure here.

I'm giving the company a voting proxy on my shares.

Also, I'm the President of Y Combinator (though this was a personal investment, not a YC one). Startups like Airbnb, Dropbox, Stripe, and many others (including reddit itself!) have gone through our program. I'm happy to answer questions about startups in general.

Excited to be along for the journey!

Proof:

https://twitter.com/sama/status/517008116857061376

and

Leaving the reddit office after our first meeting: https://twitter.com/sama/status/489593535083999232

Comments: 327 • Responses: 64  • Date: 

Here_Comes_The_King389 karma

Whaddup Sam! They let the Dogg n the building. Now do I get an official title??

samaltman118 karma

So happy you're part of this round :) Long-time fan!

Also, you should come visit YC sometime.

kn0thing105 karma

Be honest: What'd you think when me and /u/spez first launched reddit back during Y Combinator?

samaltman65 karma

How do you not remember this? I voted you guys number one in the poll!

kn0thing42 karma

Follow-up question: there'd be no reddit if Steve & I hadn't gotten into Y Combinator (thanks, Jessica!) but that was 9 years ago -- why should a couple of founders working on the next big thing apply to Y Combinator today when capital, knowledge, etc is so much more accessible for founders?

(Disclosure: I'm also a partner at YC)

samaltman29 karma

I will answer this, but you first--I think the reddit-in-YC story is a great one you should tell here:)

samaltman10 karma

We try to give away as much knowledge as we can, but 1:1 advice is still irreplaceable, and I think the YC partners are some of the best people in the world for advising early-stage startups.

Also, the YC alumni network is becoming one of the most helpful groups in the startup world--there is a strong cultural value of helping other YC startups.

PeterThiel67 karma

By way of a quick thank you to this community, because I had fun doing my own AMA recently, let me say congratulations to reddit and to Sam on this round. Looking forward to seeing reddit get even cooler.

samaltman22 karma

Thanks Peter!

Eternally6527 karma

[deleted]

samaltman46 karma

PR comes and goes. I think the more important (and harder) question is how should reddit best protect what it stands for. Yishan is far more thoughtful and intelligent about this than I am, and I trust that he'll get it right.

Free speech is both great and awful, but it's difficult to figure out how to limit it without cutting off something potentially very important. There are hurtful things that are still important to allow to be said--someday, the ability to speak up will be really important. But, like almost anyone else, I hope that the community can find a way to push out more of the bad and highlight more of the good.

The shock subreddits are just a sideshow, I think. You can't find them unless you look for them--the community generally works as designed, and most of the stuff that bubbles up is great.

tched26 karma

Hi Sam, (full disclosure: I work for VentureBeat) My question:

What will the community be able to do with its share in reddit? I'm having a hard time understanding if this is anything more than a symbolic gesture. And if it is mostly symbolic right now, do you believe that could change over time if the plan works? How much of a community stake are we even talking about here? One percent?

samaltman24 karma

We can't share the details until we get it no-actioned, but no, if we can get plan A done, it won't be symbolic.

Eternally6521 karma

[deleted]

samaltman30 karma

I'm willing to be very patient. I don't have any particular timeframe in mind. I believe that the community is very valuable and that the value will continue to increase.

Up to the company if they want to share cashflow details, but they run the company efficiently :)

hexphreak19 karma

Hi Sam! Two-part question:

  1. To what extent do you think the recent backlash against SV startup culture (e.g. the "Silicon Valley" sitcom and the use of derogatory terms such as "brogrammer") is part of its growing pains, as opposed to actual systemic flaws?

  2. With all the hype around SV startups, it's rare to hear from other parts of the world. What do you think about the startup ecosystems in Europe, and outside the US in general? Do they represent undervalued opportunities for American investors?

Thanks for the AMA!

samaltman16 karma

  1. I think it's somewhat overstated (i.e., the great majority of startups don't fall into the brogrammer category) but that we have real work to do in making the valley a place where everyone feels welcome. I think that less arrogance from the valley would be a very welcome change--we should let what we build impress people instead of talking about how great we are.

  2. Absolutely! We did a Startup School in Europe (London, actually) this summer and were blown away by the quality of the founders. One of my partners just returned from back-to-back trips to Asia. About 40% of the founders in our last batch were born outside the US.

DJSundog17 karma

What's the earliest stage of a startup you've ever personally invested in? Did anyone sell you with just a story?

samaltman42 karma

when i invested in stripe, i left the "to:" field of the check blank--patrick didn't have a real name or a corporation yet.

samaltman19 karma

(Also, as an indication of how long ago that was, it was a literal check, and perhaps is the last time i have written one.)

karmanaut15 karma

What site changes would you like to see Reddit make?

samaltman29 karma

I'm just a user--whatever the company wants to do. I used to HATE it when investors told me what to do with my product :)

karmanaut12 karma

But as a user as well as an investor, isn't there any feature that you wish the site had?

samaltman76 karma

as a user, my number one feature request is a really great mobile app.

Hapaxes13 karma

When do you think it's appropriate for a start-up culture to transition into a corporate one? Have you seen some of Y Cominator's start-ups make good compromises between 'high personal investment/flexible schedule/high reward' employment models and 'average personal investment/rigid schedule/low-medium reward' models?

I ask because I find the initial energy of a start-up culture very appealing, but I've also observed young company cultures where workers were expected to invest as much time and effort as the original founders, with little autonomy. Do you instruct your students on how to find a good balance that results in both happiness and productivity?

Thanks for answering questions! Hope you are well.

samaltman18 karma

Founders should never expect employees to work as hard and care as much as they do, but still, if you join an early-stage startup, expect to work very hard.

Most people at Facebook still seem to work very hard. Generally, I think companies should hold off the transition to feeling "corporate" as long as possible, but transition to something with better work-life balance after a few years--no one can work around the clock forever.

All of that said, I do think most startups need to get some basic HR in place sooner than they usually do.

joshu10 karma

I'm an investor in the previous round of Reddit. Hi Sam?

samaltman7 karma

Hi Joshua!

Permit9 karma

What motivated you to add Programming Tools to the list of Requests for Startups? Was there a YCombinator company in particular that opened your eyes up to the opportunity in that market?

I ask because I develop programming tools and other accelerators and incubators don't believe a large enough market exists for these tools.

samaltman18 karma

Yes, there was, and i think they're going to announce what they're working on soon :)

More generally, though, great tools are important and programming is especially important. I'd invest in tools that I believe will help hundreds of millions of new people create software even if I was sure I'd never make any money on the investment.

peaches0178 karma

Hi Sam,

Reddit has a massive, passionate, and amazing userbase, but nothing resembling a ProductHunt and/or Show HN type show-and-tell for new businesses.

As a result, companies either post in much smaller subreddits (/r/shamelessplug , /r/entrepreneur, /r/startups, or their niche's community), which really limits the exposure. Additionally, each community's moderators have their own set of rules and expectations as it comes to "advertising."

Obviously, Reddit has a service ad platform, but it's inherently limited and constrained to budget. As a result, there are continually semi-subversive (/r/HailCorporate) attempts at companies infiltrating their brand into top comments, post replies, and even submissions. I think that Yishan's recent tweetstorm evidences that this type of behavior will continue (and probably annoy users) as long as it's justifiable in terms of ROI.

As such, I think that there's a massive opportunity for something like /r/ProductLaunch, where people can post their projects and/or businesses to receive exposure and feedback. Obviously, there are fantastic monetization avenues available in an effort like this.

Do you think that Reddit ever will (or should) play a similar role to Show HN and ProductHunt?

samaltman4 karma

If people start posting there, I'll check it out.

Someone-Else-Else8 karma

Isn't Reddit a somewhat unprofitable investment? Nevermind, you answered this.

Do you ever check out /r/startups ?

What do you wish people would ask you?

samaltman6 karma

I sure hope not!

Yes.

Anything that is both 1) interesting 2) makes me think something I haven't thought before.

mxmo8 karma

Hi Sam, any tips on making a YC application stand out? i.e. are there certain items reviewers look for?

samaltman8 karma

Passion, clarity of vision, and deep insights.

mrmagoo5123 karma

Has anyone ever walked in to an interview, and within 30 seconds of talking, you knew he/she would be accepted?

samaltman4 karma

Yes.

SRD_Grafter7 karma

Could you EIL5 and how are you and the other investors giving the shares back to the reddit community? Like, will I be able to get a actual stock certificate or stock pool we can make purchases through (and potentially have to pay for it)? Or will there be some sort of meta ownership, where we just get voting power?

It sounds like in the blog post there are some ideas for the above, but the investors have yet to agree. So, what are your thoughts on it (and potentially how you personally would want to do so, if you can comment to such)?

samaltman14 karma

We know what we want to do, but we have to get regulatory sign-off (and if we can't we have a backup idea).

I probably shouldn't say too much, but my one-word hint is "blockchain".

Also, the company will be handling this, not me.

codester21247 karma

First off, thanks! Whether Reddit would one day be taken over by a large corporation due to their lack of income has always scared me, and your investment will definitely delay that possibility for a long time.

My question today is, what will you, as an investor, contribute to Reddit now that you have a relatively large stake in it, aside from money? Will you mostly sit back, or are there improvements you see to Reddit that you want to push for now?

samaltman8 karma

I will help whenever the company asks me, and otherwise I will stay out of their way.

wryknow6 karma

Why,in your opinion, is it important for sites heavily reliant on user generated content to be owned by users? Do you believe that more sites could benefit from this?

samaltman9 karma

1) People take care of what they own.

2) It just seems fair--users create the value, they should get to capture some of it.

3) I do think more sites could benefit from this, and honestly I'm somewhat surprised others haven't tried it.

claire06 karma

[deleted]

samaltman6 karma

As a user, I'm excited because it means reddit will be able to grow and do things. I'm also excited because I think online communities are one of the most powerful applications of the Internet.

As an investor (along with many redditors soon :) ), I'm excited because I think communities are some of the most defensible businesses out there. It's not a lock, of course--plenty have faltered--but it's at least a good bet.

SixthSigmaa5 karma

Hey Sam. Do you have any tips on how I can make the most out of Startup School next weekend? I'll be attending the reception as well.

samaltman3 karma

I am fairly shy in big groups and terrible at conferences. I probably don't have great advice here.

spocklivelong5 karma

What changed at YC after you took over?

samaltman40 karma

The IQ of the position went down.

ImagineRandom4 karma

I've always wondered how does YC work for folks who are on an H1-B, F1 or any other visa?

I've never seen documentation talking about it and it seems to be a big big deterrent/worry for friends on visas who have great ideas and prototypes.

samaltman12 karma

We help founders get visas as much as we can. It's a headache, and I think turning away people who want to start companies and create jobs here is one of the dumbest positions taken in the name of politics in a long time.

Anusman_3 karma

Hi Sam--will the expansion to 'community ownership' be the beginning of an inevitable push towards an IPO? Do you plan to expand ownership of reddit without eventually going public? If so, how?

samaltman9 karma

Who knows. Maybe there will be a better option than an IPO. It's up to the reddit team, not me, but I think they should do whatever is in the best long-term interest of the company.

alhena3 karma

Can you share the story behind you becoming the president of yc? Were you promoted from within or headhunted externally?

_sentient3 karma

Sam was in the original YC batch, and was a partner for years before becoming president.

samaltman3 karma

That is correct.

iscreamforIAMA3 karma

Hello Sam! Reddit IAMA banned without warning my other account for asking too many people about their favorite ice cream. Can you please intervene on my behalf?

Also, what, please, is your favorite ice cream?

samaltman5 karma

Cinnamon.

jmaclure112 karma

In his Stanford class and new book, Peter Thiel's thesis centers around the need to doggedly avoid competition when founding a new startup. However, at YC and in your own Stanford class, competition is much less discussed and/or feared, and the advice is to ignore competitors. How do you think about this seemingly conflicting advice?

samaltman4 karma

Peter is speaking at the class next Tues. We're going to let him cover that part :)

We do talk about it during YC, but one thing we tell early startups is that they are unlikely to get killed by competitors; it's much more likely they'll kill themselves. In the early days, you should focus more on creating a product people love. Later, you have to worry about how to not have competitors (though a strategy for this is a component of many great ideas).

jmkerns2 karma

Hi Sam - how do you think about a community like Reddit and its role in helping reflect / shape your online identity? What online profile do you think is best representative of what you are thinking about on a day-to-day basis (i.e., Twitter? HN? Reddit)?

samaltman2 karma

I don't think any are that good, but Twitter is probably best in my case.

MissionPossimpible2 karma

Hi Sam! Has there ever been a start up that you've fallen in love with but just not been able to invest in due to one reason or another? how often does this happen?

Also, how difficult was it to remember the password for this account after 8 years?

samaltman6 karma

Once, and sadly I can't tell the story publicly.

I got it on the first try :)

ltray2 karma

Hey Sam,

In your blog say "Series B Investors are giving 10% of our shares in this round to the people in the reddit community".

What exactly does this entail for the average user?

samaltman2 karma

Addressed elsewhere, probably can't add a lot more detail :(

someguyfromcanada2 karma

Hi Sam. I am curious as to your motivation to give "the company" a proxy. Who will be exercising that vote and why did you decide that is something you thought best? And how/when is it revokable?

samaltman2 karma

It gets revoked in cases of fraud and similar situation.

I think that, most of the time, investors destroy their own value when they try to get creative and force a sale or whatever. I also wanted to be sure the community didn't worry I was going to this.

kickme4442 karma

Hey Sam, You wrote a blog a while back about employee equity. I'm wondering if you've seen any of this get put into practice or if you're advising companies on this?

samaltman2 karma

Yes, a lot of founders have told me they've put some or all of this into practice at their companies!

NorbitGorbit2 karma

Is there an LLC-like structure that would allow you to hire YC applicants so that they didn’t have to form their own LLCs, payroll, costco cards etc… but still allowed you to compartmentalize their budgets and liability exposure?

samaltman8 karma

You can do some really creative stuff with LLCs, but why bother? It's clean and simple to create a new one, and the challenges of setting up a company (which YC helps with anyway) pale in comparison to everything else a startup has to do.

NorbitGorbit2 karma

I’ve seen many companies (including YC-funded ones) more likely through negligence rather than deceit, mess up a lot of the boring accounting/hiring issues, so that is why bother — to have someone competent (such as YC) handling that end so that they can focus on the challenging stuff (which they often do while neglecting the basic administration overhead).

samaltman3 karma

We have a checklist of what companies need to do when they start (I'm actually working on a new one for companies when they get to the ~50 employee mark--founders are often very busy and forget to do important thing).

We can't force them to get everything right, but we sure try...

villl2 karma

Could you take on a tiger with a cricket bat in an office environment?

samaltman7 karma

For a very small value of "tiger".

kullee2 karma

Hey Sam it is great to have you on r/AMA. Since you have seen Reddit through the early stages with YC, what do you think the best move Reddit has made to get to the user base it is at now?

samaltman11 karma

Subreddits. One of the most brilliant moves in the history of online communities.

InQii2 karma

Hey, some students at my University started a project where we follow, watch and discuss your "How To Start a Startup"-Course that you started at Standford.

I just wanted to thank you for sharing your experience and wisdom with us!

Would you like to give a short shoutout to the the RWTH Aachen University in Germany?

You rock!

samaltman3 karma

Hi RWTH Aachen! Thanks for watching the class; I hope you enjoy it.

kenbw22 karma

As any organisation moves towards better funding, it inevitably changes away from what originally made it great. What are your thoughts on this for Reddit?

samaltman3 karma

That doesn't always happen. Often, funding makes a company far greater.

Someone-Else-Else2 karma

Could you take Peter Thiel in a fistfight?

samaltman4 karma

Not sure, but he can beat me in a game of chess in 30-40 seconds.

OneRandomMe2 karma

What do you think would be your biggest impact on the world would be? Or do you believe you have done something already?

samaltman3 karma

I hope that it will be funding companies that transform the world in great ways. I think startups are a very good way to do new things, and I think YC is a very good platform for helping startups.

vaurn1 karma

http://yclist.com/ shows some companies as dead and some as exited - it is not updated regularly, so I would imagine there are quite a few more that are dead, and some that are dead after exit.

If possible, can you talk about what percentage of companies are dead from say all batches pre 2012?

Also, there are some companies on the list that baffle - as to the decision to invest in them like http://hoverchat.com from the last batch or http://www.chromaom.com from 2010. Do you really look at just founders and not the idea?

Finally the industries heavily represented in the entire list are data metrics, app related tools, and social communities or directories etc. There seems to be a huge dichotomy between this and https://www.ycombinator.com/rfs/. Why is this?

samaltman1 karma

1) Less than half.

2) It's very hard to say what is going to baffle in the good way and what is going to baffle in the bad way. What we're doing seems to be working in aggregate, but of course there will be a lot of failures.

3) Take another look in 5 years :)

kellyreid1 karma

This is in regards to the quote from your blog, "I believe we are still in the early days of importance of online communities, and that reddit will be among the great ones."

I'm the owner of a niche community site. We're well-monetized and have fiercely loyal fans. What do small but passionate community sites need to do to capitalize on these "early days"?

ALSO, are there ever good opportunities for exits with these small community sites? Assume revenue between 100k and 1M. Who buys them, and why?

samaltman2 karma

Focus on getting a small number of super-engaged users that love you, and them spread the community.

If you're building it for an exit, you will probably be disappointed. That's not a specific statement about a community site but a general comment about startups.

sartorial_satirist1 karma

How is this not a follow on round by a YC partner? Are you worried about signaling?

samaltman4 karma

YC no longer owns any of reddit :( Conde Nast bought our shares, and we didn't get new ones in the spinout.

This is not at the stage/valuation level where I have any concerns about signaling (and reddit went through YC 9 years ago...presumably any information advantage we have is long gone). Instead of a lot of personal early-stage investments, where there would be big signaling problems, I'm planning on infrequent late-stage ones.

And in this specific case, some of the nontraditional things I think are important for reddit in this round (community ownership, voting proxy on the shares) are terms that would be tough for a VC to set--it's easier for someone like me to say "this is what's happening" and then they can sign on to that.

drocks271 karma

What did you start out in and how did you get to be the level of an investor?

samaltman3 karma

I dropped out of college to start a company in 2005. In 2010 I started investing (small amounts and only 4 companies that year) and I've steadily ramped it up since. I've really tried to study how to be a good early-stage investor--here are some thoughts:

http://blog.samaltman.com/black-swan-seed-rounds

counttess1 karma

What makes Y Combinator's program so successful? Is it the people coming through it (e.g., they would have possibly made anyways because they're that good) or is there something about the program itself?

samaltman2 karma

I think it's both. We are very fortunate that we get amazing people to apply, and we work very hard to help them.

I think the single biggest "secret" is the strength of alumni community.

releasetheelephant1 karma

[deleted]

samaltman3 karma

I expect to be at YC for a very long time.

We have a lot of plans about the future for YC that are very exciting, but given my normal advice about not hyping yourself, I'll hold off on sharing them until they're ready :)

yours_duly1 karma

[deleted]

samaltman3 karma

You should work on whatever you want--there is no shame in a web service.

But I disagree that the days where a small team can have a huge impact are gone. Every great startup begins with a very small team. It's worked in the past and it will work again. For example, both of the nuclear energy companies in this summer's batch began YC with less than 5 people.

n00buser1 karma

Could you be able to share percentage of successful applications to YC from outside US. Is there anything like an implicit preference towards US applicants or it's just that the absolute number of applications you receive from outside is too low.

samaltman2 karma

No implicit preference towards US applicants. We don't break out the acceptance rate, but my guess is it's about the same. The number of non-US applicants keeps going up, and thus so does the number we accept.

c0bracommander1 karma

What do you think of websites that start as a subreddit and eventually grow/break off to do their own thing?

samaltman2 karma

I think it's cool!

shutupmrburns1 karma

We all know reddit is mostly non-profit, but investors such as yourself keep it afloat. You're willing to be patient and wait until it's ROI. How do you find the financial value in communities like reddit?

samaltman2 karma

Honestly, anyone who tells you they can do it precisely is lying. I made a few models but ended up using them only for very rough guidance.

acehunter1 karma

I think Paul Graham is speaking tonight at your Stanford course, are you excited? I'm excited!

Edit: yep he is, http://startupclass.samaltman.com/courses/lec03/

samaltman2 karma

He is. I've read his talk and it's great (sadly, I have to go to my class in about half an hour and take a break from doing this)

Rexburg1 karma

Were you able to sit in on the Dropbox deal?

I did a case study on the company and I believe some of their initial capital came from ycombinator.

samaltman4 karma

They went through YC in the Summer of 2007. Incidentally, Drew previously applied with an idea for an SAT prep company that we rejected.

alhena1 karma

Hi Sam, as a solo applicant to yc's next round, what can I do to increase my chances to get in?

samaltman3 karma

I don't mean this to be glib, but have a good company. It's tough to hack our application process. Being a solo founder definitely sets the bar higher, but it's not impossible.

eire91 karma

Hey Sam, I've been a follower for a while and really appreciate the insight you provide here and on your blog. I've had a relatively successful career since college, but have always been much more passionate about startups and creating something. I'm sure you meet people in similar situations through YC all the time, so do you have any advice for someone looking to potentially make the leap and switch careers?

samaltman2 karma

If it's what you most want to do it, then you should do it. What's stopping you?

504boy1 karma

Hi Sam - considering that the legal costs of a a startup can often be significant, such as forming the operating agreement or getting the legal framework in place when laws haven't accounted for a new model yet, what does YC do to help out on that end? Do you partner with firms to offer up pro bono work? Have you seen startups give up equity in exchange for bringing an attorney on board?

samaltman3 karma

We have two amazing in-house attorney and standard documents. Most of our startups also use Clerky which really helps. We are generally able to take care of this very quickly.

starkbot1 karma

How do you feel about Reddit being financially transparent including around shareholders, percentage of equity owned, terms of financing, revenues, cashflow, etc.? Is this in the cards? Seems like it would be appropriate for a company like Reddit to seek out utmost transparency in this regard.

samaltman2 karma

I'm certainly supportive of whatever the company wants to disclose.